The government will accord top priority to national interest in negotiations to forge free trade agreements (FTAs) and it won’t “diverge from this approach for the sake of deadlines”, commerce and industry minister Piyush Goyal said on Friday.
The statement comes at a time when it’s becoming increasingly clearer that a proposed FTA between India and the UK will miss the Diwali deadline. As FE has reported, both the sides are yet to wrap up negotiations for the FTA text. Usually, once the text is finalised, it’s subject to legal scrubbing and other internal processes like Cabinet clearances before it’s ready to be signed.
Goyal was speaking at a meeting with export bodies and senior government officials, convened by him to brainstorm ways to boost exports. It was held just days after data showed merchandise exports shrank 3.5% in September from a year before to $32.6 billion, the first such monthly drop since November 2020.
Top executives of export bodies who attended the meeting asked the government to facilitate the introduction of an export refinance facility to ensure greater flow of cheaper credit to the export sector, and also push for a mechanism for the rupee trade with not just Russia but also countries like Sri Lanka, Nepal and others that are facing forex crisis of varying degree.
A Sakthivel, president of the apex exporters’ body FIEO, suggested that the Reserve Bank of India (RBI) bring in the export refinance facility under which the rupee credit provided to the export sector may be refinanced by the central bank to lenders at the cheaper repo rate. It would help exporters in the rising interest rate scenario.
He also sought exemption from GST payment on export freight, saying the refund of it through the ITC mechanism takes 2-3 months, thus blocking the working capital.
Mahesh Desai, chairman of the engineering exporters’ body EEPC India, called for the rollback of the 15% export tax on certain stainless-steel products, a key raw material for some engineering exporters. He argued that they have “very low domestic consumption” and they have not added to inflation woes. Engineering goods, as a whole, account for about 20-25% of the total merchandise exports.
He also asked for a review of the tax remission scheme RoDTEP and suggested a full rebate on the taxes, including certain embedded levies. He also recommended the inclusion of the steel sector in the RoDTEP It was also recommended to include the steel sector under RoDTEP as steel is the most widely used raw material in the engineering industry.